The Owens Company budgeted sales of 20,000 printers at $90 per unit last year. Variable manufacturing costs were budgeted at $46 per unit, and fixed manufacturing costs at $12 per unit. A special order for 1,000 printers at $72 each was received by Owens in April. There is enough plant capacity to meet these additional units without incurring any additional fixed manufacturing costs; however, the production would have to be done on an overtime basis at an estimated additional cost of $5 per printer. Acceptance of the special order would not affect Owens' normal sales and no selling expenses would be incurred. What would be the increase to net operating income if the special order were accepted? O $21,000 O $9000 O $14,000 O $10,000 O none of the above
The Owens Company budgeted sales of 20,000 printers at $90 per unit last year. Variable manufacturing costs were budgeted at $46 per unit, and fixed manufacturing costs at $12 per unit. A special order for 1,000 printers at $72 each was received by Owens in April. There is enough plant capacity to meet these additional units without incurring any additional fixed manufacturing costs; however, the production would have to be done on an overtime basis at an estimated additional cost of $5 per printer. Acceptance of the special order would not affect Owens' normal sales and no selling expenses would be incurred. What would be the increase to net operating income if the special order were accepted? O $21,000 O $9000 O $14,000 O $10,000 O none of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:The Owens Company budgeted sales of 20,000 printers at $90 per unit last year.
Variable manufacturing costs were budgeted at $46 per unit, and fixed
manufacturing costs at $12 per unit. A special order for 1,000 printers at $72
each was received by Owens in April. There is enough plant capacity to meet
these additional units without incurring any additional fixed manufacturing
costs; however, the production would have to be done on an overtime basis at an
estimated additional cost of $5 per printer. Acceptance of the special order
would not affect Owens' normal sales and no selling expenses would be incurred.
What would be the increase to net operating income if the special order were
accepted?
O $21,000
O $9000
O $14,000
O $10,000
O none of the above
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